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Computation of WACC

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Question: Wippet Industries (WI) has a book value capital structure as shown below.
- Bonds pay annual coupons of $91
- Have 6 years to go until they mature
- Have a YTM of 7%
- Stock sells for $22 per share
- Has a beta of 1.39
- Expected return on the market is 12%
- t-bills pay 3.3%.
- Taxes are 32%.

What is the WACC for WI?

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Solution Summary

This solution explains the required steps for the computation of the WACC based on the given information. The solution is provided in an attached Excel spreadsheet, By clicking directly onto the cells, you can see what functions were employed to calculate the desired values.

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